Here Comes the Next Fiscal Crisis

Op-Ed appeared in the Los Angeles Times, July 8, 2009
Alan J. Auerbach and William G. Gale

The U.S. confronts not one but two economic challenges: Its worst recession since the Depression and a growing imbalance between federal spending and revenues that makes its underlying fiscal policy unsustainable.

To get the economy going, the Obama administration and Congress have committed trillions of dollars to bailouts of the financial and automobile industries and to a stimulus package of tax cuts and government spending. These measures, on top of our current economic weakness and the imbalance between spending and revenues, have left us with a projected federal budget deficit of $1.7 trillion in 2009, or 12% of U.S. gross domestic product, a deficit share we have not even approached since World War II.

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Give Up A Benefit, Gain Jobs

Op-Ed appeared in the Washington Post, July 9, 2009
Leonard Burman

With union membership shrinking and wages strained, it might sound crazy to argue that labor should voluntarily give up a huge fringe benefit: tax-free health insurance provided by employers. But it should. In the long run, capping the amount of health insurance that employers can provide tax-free would raise workers' wages, partially protect them from layoffs and speed rehiring after a downturn.

Right now, employer-paid health insurance is entirely tax-free -- a break that will cost the Treasury about $250 billion this year. If an employer pays $12,000 for health insurance, that money is not counted as income, whereas the same $12,000 paid as cash wages is subject to income, Social Security and Medicare taxes. The more generous the insurance policy, the bigger the tax savings.

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Another stimulus? Say it Ain’t So

appeared in TaxVox on July 10, 2009
Howard Gleckman

Congressional Democrats, having apparently lost patience with the first Obama stimulus, are beating the drum for yet another round of government money to pump up the still-lagging economy. They need to take a deep breath.

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